The federal government has been urged to leverage fiscal policy measures to enhance production in the real sector of the nation’s economy.
Dr. Muda Yusuf, Director and Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), commended the government for President Bola Tinubu’s recent Executive Order that removes tariffs, value-added tax (VAT), and excise duty on imported pharmaceutical inputs.
Yusuf stated, “The CPPE applauds the Executive Order removing import duties, VAT, and excise duty on pharmaceutical raw materials, intermediate products, and medical diagnostic equipment and machinery. These fiscal policy measures will boost domestic production of pharmaceutical products, lower medication costs, improve healthcare access, and positively impact citizens’ well-being. This will also rejuvenate our pharmaceutical industries and create more jobs.”
He emphasized that well-targeted fiscal policy measures could effectively address supply-side challenges in the economy and that boosting production is crucial to tackling current inflationary pressures, primarily driven by these challenges. Fiscal policy measures, he argued, are potent tools for achieving this goal.
Yusuf recommended extending these fiscal policy measures to other segments of the real sector. He called for similar executive orders for agriculture, agrochemicals, and agro-allied industries to curb surging food inflation, and interventions in the energy sector to promote energy security and incentivize private investments. He also highlighted the need for support in the iron and steel sector to aid the construction industry and reduce costs for housing and infrastructure.
He also advocated for fiscal policy protection to support domestic investments in petroleum refineries, aiming to conserve foreign exchange, create jobs, and deepen backward integration. Yusuf emphasized the importance of protecting the nation’s real sector, noting that similar measures are adopted globally.
“There is a rising trend of economic nationalism worldwide, and we should respond by strengthening our domestic production capabilities across all sectors. Fiscal policy measures have shown to be more impactful on real sector performance than monetary policy,” Yusuf said.
He stressed the necessity of protecting and incentizing the real sector to enhance production and ensure sustainable investments. Yusuf warned against the dangers of complete trade liberalization in the face of challenges faced by domestic manufacturers and called for measures to stem the deindustrialization of the Nigerian economy, the exit of foreign direct investors, and the rising mortality rate of domestic industries.
“By stepping up fiscal policy interventions, we can achieve these objectives,” Yusuf concluded.
